Stock Market Game - Diversification (SIFMA)

What is it called when you spread your money

across different types of investments, sectors, industries and company sizes?

• Throwing spaghetti at the wall to see what sticks

• Diversification

• Index

• Market Cap

Answer explanation

Diversity reduces risk!

Why should you diversify your investments?

• If one stock goes down, hopefully another stock might go up

• Because the investment gurus said so

• Diversity is always a good choice

• To lower your risk

A broad group of similar businesses, often in the same industry is called a?

(Healthcare, technology and retail are examples)

• Market Cap

• Industry

• Sector

• Jeff Bezos

Answer explanation

All stock companies are part of a market sector and industry.

Example:

AAPL (Apple)

Sector: Technology

Industry: Consumer Electronics

Within a sector, what is a smaller group of companies with similar products or services called?

• Industry

• Sector

• Market Cap

• Index

What is used to track changes in a specific sector or in the economy?

(S&P500, Dow and Nasdaq are examples)

• Market Cap

• Industry

• Sector

• Index

What measures volatility (rate of change, up or down in stock price)?

(Example: 1 means stock moves at the same rate as the market)

• Index

• Trampoline

• Stock Market

• Beta

What is the total dollar value of a company’s outstanding

shares of stock called.

(For example: Facebook (META)'s is $527 Billion)

• A whole lot

• Index

• Market Capitalization (market cap)

• Beta

These investments pool money from many investors into a

diversified portfolio of stocks, bonds, and other securities.

• Basket Investing

• Mutual Funds

  ETFs

  (Exchange Traded Funds)

  & Index Funds

• Betas

• Indexes